Senators support fee increase

October 25, 2011

Sens. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, and John McCain of Arizona, its ranking Republican, endorse President Obama’s call to establish next year a $200 enrollment fee on TRICARE for Life, the prized supplement to Medicare for 2.1 million elderly military retirees, their spouses and survivors.

These influential senators made their views known on TRICARE changes and other defense budget issues in separate letters to the Joint Select Committee on Deficit Reduction. The so-called “super committee” of 12 lawmakers faces a Nov. 23 deadline to recommend to the full Congress a plan to trim the nation’s massive debt by $1.5 trillion over a decade.

The first TRICARE for Life fee would climb to $295 in 2013 and, under the president’s plan, would be raised annually thereafter to keep pace with health care inflation. Levin, however, wrote that annual adjustments should match the percentage increase in enrollment fees to TRICARE Prime, the managed care option. And both the House and Senate versions of the 2012 defense bill would raise Prime fees in the future, for working-age retirees only, by the percentage increase given retirees as cost-of-living adjustments.

Levin and McCain also back, with caveats, Obama’s other cost-saving initiative for TRICARE — charging sharply higher co-payments on drug prescriptions filled through the TRICARE network of retail pharmacies.

Obama wants co-pays at retail to be brought nearer to the $45 per brand drugs paid by federal civilian employees. Initially generic drugs at retail would be set at 10 percent of the department’s cost. After 2013 this would climb to 20 percent. Co-pays for brand names would start at 15 percent of cost and be raised to 30 percent over time.

Levin promised to work with Defense officials on an alternative plan that would achieve the same level of savings, estimated at $20 billion over the next decade.

Levin recommended that the joint committee support the new TFL enrollment fee. McCain called it a “reasonable step” considering the hefty rise in national health care costs since Congress established TFL in 2001.

It “would still keep the cost of TRICARE for Life well below costs of comparable ‘Medigap’ policies paid by non-DoD healthcare beneficiaries and would reduce entitlement spending significantly,” McCain wrote. He noted the fee would hit “a group on mostly fixed incomes who are vulnerable to unanticipated changes in expenses.” Still, he wrote, it should be considered.

The White House debt reduction plan described military retirement as “out of line with most other government or private retirement plans.” But it also said changes should not apply to the current force. Obama wants a powerful commission, similar to base closing commissions, to study the matter and offer a reform plan for future generations. Congress would have to approve or reject but could not be alter it. Levin wrote that such a study should include all features of military compensation including allowances.

Defense Secretary Leon Panetta and Army Gen. Martin E. Dempsey, the new chairman of the joint chiefs, told the House Armed Services Committee last week that the current force must be protected.

“I’ve made very clear that we can’t break faith with those in the service,” said Panetta. “We made a promise to people who are on duty that we’re going to provide a certain level of retirement. We’re not going to back away from that.”